Renting a home is fast becoming more common than buying. Despite the fact that interest rates are at a historic low, it is still incredibly tough for first time buyers to gain a foothold on the property ladder. Because of this, in many cases, families are choosing to rent rather than buy. In the traditional buy to let scenario, a landlord buys a property and rents it out to a tenant. Most of the time, this works very well, but with the availability of rental property far outstripping demand in some areas, some property entrepreneurs have come up with a new way of making money on the back of Generation Rent.
Rent to Rent
Rent-to-rent is a new concept. It is basically a form of sub-letting—an investor rents a property from a landlord and then sublets it to tenants. Usually any spare communal rooms are converted into sleeping accommodation. For example, a one-bedroom flat would be converted into two bedsits with a communal kitchen and bathroom. This approach allows rents to be increased. In fact by all accounts it is possible to gain a further £500 per month from a rental property just by maximising the available space.
Big Profits
This type of multi letting is proving to be incredibly profitable and one London investor who sub-lets 200 rooms claims to be making £35k profit every month.
Advantages of Rent to Rent
There are a number of advantages to this type of business plan. By renting from existing landlords, you don’t need any capital. Rent to rent entrepreneurs are also more likely to let a room on “licence” rather than hand over a traditional tenancy agreement, which means the tenant is a lot easier to evict.
